Printing Money

The Fed's recent decision to buy $600 billion of Treasury bills amounts to printing vast sums of money. It is also a thinly disguished attempt to manipulate the dollar.  Despite assurances to the European Central Bank that currency weakening is not the primary intention of the move, it has already resulted in currencies around the world rising to new highs against the dollar.  To its credit, the ECB practiced restraint in its response rather than retaliate. 

Such moves not only undermine the already lackadaisal financial cleanup at the banks (by pouring money into a system already flushed with cash - corporate cash reserves are at historical highs), it completely mis-reads the reasons why unemployment is still so high.  Confidence in the government's ability to restrain itself no longer exists.  Hence, like Japan in the 1990s, households and corporations are hoarding cash to counter government policies that punish investment and wealth creation. Small companies are not being created at the rate needed to boost employment because the reward for risk taking is low and large companies are not hiring for much the same reasons.

The Fed is supposed to be independent of the government.  It is supposed to protect the integrity of the nation's financial system. Instead, it is determined to support the White House's political agenda.  Quite unbecoming of the guardian of free market capitalism.